Authority and Study Objectives

Adopted by the 1993 Session of the General Assembly, House Joint Resolution No. 453 established a nine-member joint study committee to examine Virginia's educational museums and the appropriate level of public funding for these institutions. Acknowledging the significant value of museums as educational and cultural institutions, the resolution noted the Commonwealth's traditional financial support for these institutions and cited the "lean financial times" that may have prompted reductions in appropriations to various educational museums. The joint subcommittee was directed to conduct a "comprehensive study" of educational museums, to develop criteria for eligibility for receipt of public funds as well as guidelines for state appropriations, and to examine "ways in which the Commonwealth might encourage and promote the arts." The committee's work included a review of a variety of complex financial and policy issues, including museum patronage, geographic location, impact on other activities promoting tourism and economic development, and state and local ability to support these institutions.

Responding to the charge of HJR 453, the joint subcommittee conducted five meetings to examine the missions and services of nonstate museums across the Commonwealth. The joint subcommittee sought the input of representatives of the Virginia Commission for the Arts, the Virginia Department of Taxation, museum associations, and the institutions themselves to explore the use and availability of funding sources for public and private museums, including federal, state, local, and private funds. In pursuing its study, the joint subcommittee visited nonstate educational museums across the Commonwealth to provide a closer look at the valuable programs and resources offered by these institutions.

Funding Museums and Other Cultural Institutions

Museums are recognized today not only as cultural and educational institutions, but also as catalysts for economic growth. Offering educational programs, exhibits, and cultural events, these institutions may promote a locality's image as a center of learning and creativity. Whether established by governments or private entities, museums and other cultural institutions operate as nonprofit enterprises, relying on public and private funding to support their cultural and educational missions. In 1989, private giving to the visual and performing arts stood at an estimated $7.5 billion nationally. Comprising approximately 97 percent of all arts funding, private donations are essential to the survival of museums across the country.

Although the issue of government funding for the arts continues to prompt concerns regarding free expression and the role of art in society, federal support for the arts can be traced to the 19th century. Today, the arts and humanities claim less than one percent of the federal budget. Federal support for the arts is provided either directly through government agencies and programs or indirectly through tax deductions and other benefits. In 1989, direct federal arts spending totaled an estimated $1 billion. Major sources of this direct support are the National Endowment for the Arts (NEA), the National Endowment for the Humanities (NEH), the Institute of Museum Services (IMS), and the Smithsonian Institution.

States support museums and arts organizations in much the same manner as the federal government. Direct appropriations and tax benefits provide much-needed fiscal support, while arts councils in every state and territory provide a range of services. The arts claimed $284 million in combined legislative funding in 1990. Continuing economic challenges, however, have prompted many states to develop new strategies for arts and museum funding. While some states have designated specific revenue sources for arts funding, others have expressed concern that "earmarking" may encourage legislatures to reduce regular appropriations. Lottery moneys and state income tax check-offs generate modest arts funding in several states. Special local taxes, such as hotel occupancy taxes, and percent-for-art legislation have also provided support for museums and arts organizations.

Virginia's Museums: Funding for Multifaceted Missions

The Commonwealth boasts over 400 history, science, art, and children's museums. Sustained by public and private dollars, these cultural and educational institutions attracted more than 23 million visitors in fiscal year 1991-1992. It is estimated that private funding surpasses government support for these institutions by a three-to-one margin. The recent national economic downturn has tested museum budgets throughout the Commonwealth, where as many as 40 museums rely heavily on state support. Private funding has been affected as well; museums across Virginia cited difficulties in enlisting corporate and individual support in 1991.To combat these fiscal challenges, institutions have eliminated positions, altered benefits packages, reduced employee wages, and modified their programming.

Like the federal government, the Commonwealth provides indirect funding for museums through a variety of tax deductions and exemptions. Specific property tax exemptions and exemptions from state retail sales and use taxes benefit many museums. Donations to these organizations are also exempt from Virginia income taxation, to the extent these same donations are exempt or deductible from federal income taxation.

Direct funding for Virginia's museums--whether publicly or privately operated--is typically supplied through direct legislative appropriations or by the Virginia Commission for the Arts. In 1991-92, the Commission awarded nearly $1.7 million in grant moneys; a total of 731grants were awarded to 499 artists, museums, and cultural organizations.

Claiming top priority for Virginia's direct appropriations for museums and arts organizations are those institutions that have been established by the Commonwealth as state agencies--the Virginia Museum of fine Arts, the Science Museum of Virginia, the Frontier Culture Museum, the Jamestown-Yorktown Foundation, the Board of Regents of Gunston Hall, the Virginia Museum of Natural History, and the Chippokes Plantation Farm Foundation. The operations and administration of these institutions are subject to the provisions of the Virginia Personnel Act, the Freedom of Information Act, the Administrative Process Act, the Procurement Act, and the state budget planning and development process. Capital projects for state agencies are included in separate legislation detailing the method of financing, such as revenue bonds or other debt. The Science Museum of Virginia, the Frontier Culture Museum, and the Jamestown-Yorktown Foundation benefited from the passage of the 1992 educational institutions bond referendum.

Virginia also provides direct appropriations to several nonstate museums and cultural organizations. Like any state museum seeking a direct appropriation, nonstate agencies--defined as any public or private foundation, authority, institute, museum, corporation or other entity that is not a part of state government or a political subdivision as established by law--must file a request for aid with the Department of Planning and Budget biennially in odd-numbered years. The entity must certify that local or private matching funds are available and provide documentation of its tax-exempt status in the Internal Revenue Code. In 1993, the General Assembly provided $2,324,025 in direct appropriations for financial assistance for cultural and artistic affairs to 21 nonstate agencies.

Conclusions and Recommendations

Nonstate museums must compete not only with state institutions for appropriations, but also with the pressing demands that education, social services, transportation, and other programs place on the Commonwealth's budget. Dependent on stable, consistent funding to support their daily operations, nonstate museums must also rely on steady fiscal support to provide "seed money" for other grants and awards. Although each nonstate museum seeking an appropriation must comply with a defined applications process, no clear criteria exist for awarding state funds to these entities.

The development of any specific criteria for funding nonstate museums, however, necessitates consideration of a variety of complex policy and fiscal concerns. While objective standards for funding may provide needed guidance in lean fiscal times, strict criteria may preclude consideration of a number of deserving organizations. A museum's access--or lack of access--to other funding sources, such as federal, local, and private funds, may prove a significant factor in determining appropriate levels of state support. The establishment of specific funding criteria for nonstate museums in Virginia necessarily requires the careful balancing of financial need and consistency with fiscal responsibility, fairness, and flexibility.

Although the joint subcommittee has received testimony regarding museum patronage, geographic location and impact on other activities promoting tourism and economic development, and state and local ability to support these institutions, further study is needed to develop an effective funding mechanism for these museums that will carefully balance financial need and consistency with fiscal responsibility, fairness, and flexibility. The joint subcommittee therefore makes the following recommendations:

Recommendation 1: That the Joint Subcommittee Studying Educational Museums and the Appropriate Level o Public Support to be Provided Such Institutions be continued.

Recommendation 2: That the Commonwealth increase its funding for the Commission for the Arts, consistent with the goal articulated by the General Assembly of an ultimate annual general fund appropriation of one dollar per capita.

Finally, the joint subcommittee wishes to issue the following policy statement, recognizing the valuable contributions of educational and cultural museums to the Commonwealth and acknowledging the need for consistent, equitable support for these institutions:

WHEREAS, the Commonwealth boasts over 400 history, science, art, and children's museums, institutions which, with the support of public and private dollars, attracted more than 23 million visitors in fiscal year 1991-1992; and

WHEREAS, the Commonwealth's museums, whether established by government or private entities, enhance educational opportunities for all Virginians, promote community growth and economic development, and enrich the overall quality of life for citizens throughout Virginia; and

WHEREAS, ensuring continued access and excellence in the arts and education is contingent upon the availability of adequate and stable funding for these institutions; and

WHEREAS, state funding for Virginia's museums--whether publicly or privately operated--is currently supplied through direct legislative appropriations or by the Virginia Commission for the Arts; and

WHEREAS, while those institutions that have been established by the Commonwealth as state agencies--the Virginia Museum of Fine Arts, the Science Museum of Virginia, the Frontier Culture Museum, the Jamestown-Yorktown Foundation, the Board of Regents of Gunston Hall, the Virginia Museum of Natural History, and the Chippokes Plantation Farm Foundation--receive priority consideration for Virginia's direct appropriations, several nonstate educational museums have also received direct state funding in recent years; and

WHEREAS, dependent on consistent funding to support their daily operations, nonstate museums must also rely on steady fiscal support to support their educational and cultural operations and to provide "seed money" for other grants and awards; and

WHEREAS, these nonstate museums must compete not only with state institutions for appropriations, but also with the pressing demands that education, social services, transportation, and other programs place on the Commonwealth's budget; and

WHEREAS, while the diverse collections of these nonstate institutions may include historic artifacts, artistic treasures, or wildlife, the multifaceted missions of these institutions are linked by their commitment to education, economic development, and community service; and

WHEREAS, although each nonstate museum seeking an state appropriation must comply with a defined applications process, no clear criteria exist for awarding state funds to these entities; now, therefore, be it

RESOLVED, That the Commonwealth hereby recognizes the valuable contributions of nonstate educational museums in fostering economic development, enhancing educational growth, and preserving and promoting the arts, sciences, and history; and, be it

RESOLVED FURTHER, That the Commonwealth should provide a system of consistent, equitable funding for those nonstate educational museums demonstrating a commitment to the continuation and fulfillment of their missions of service, education, and development.